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Gr 4 promotion of self help groups under the shg(1)
This document summarizes studies on India's Self Help Group (SHG) Bank Linkage Programme. It finds that NGOs promoted the most SHGs (136,000) but government agencies promoted the highest percentage (52%). SHGs promoted by different institutions varied in how long they took to prepare SHGs for linkage (6-18 months) and how long they provided post-linkage support (6-60 months). The cost to promote one SHG also varied greatly by institution (Rs. 200-20,400). Banks found lending to SHGs beneficial with better repayment than other loans. However, promoting SHGs also burdened bank staff time. NABARD's role in delegating SHG promotion and monitoring
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Gr 4 promotion of self help groups under the shg(1)
- 1. Promotion of SelfHelp Groups under the SHG Bank Linkage Programme in India By Malcolm Harper Presented By: GROUP 4 Prachi Mishra Krushna Chandra Hembrum Rabindra Kumar Chane
- 2. Introduction These studies providemulti-perspective evaluation of the SHG-bank linkage programme from academics, consultants and practitioners of micro Finance from India and abroad. • A review of the progress and impact of the overall strategy for scaling up the SHG Bank Linkage Programme over the last decade • Role and scope of NGOs and non-NGO agencies as SHPI • Study on commercial aspects of impact of SHG-bank linkage programme on bank branches • Evaluation of SHG Bank Linkage Programme based on the economic indicators on the members of SHGs • Impact of SHG Bank Linkage Programme on Social Indicators and Empowerment of the members
- 3. Self Help PromotingInstitutions (SHPI) • NGOs:- NGOs are trusts or societies which promote SHGs for bank linkage. • Banks:- Banks are themselves SHPIs when branch staff themselves promote SHGs, from scratch, and then mobilise their savings and lend to them. • VVVs:- are farmers‟ clubs which have been set up, usually with assistance from NABARD, and initially to improve the credit culture in their community. • Government agencies:- is a term which covers a wide range of state and central government entities which have started to promote SHGs under various schemes. • Self-employed individuals:- are people who promote SHGs not as employees or members of an institution but as individuals.
- 4. Types of SHPI:their strengths and weakness The Desired Quality of a SHPI • Low cost and in a short time, • Includes the poor, and the benefits would be equitably enjoyed by all, • Repayment of loan on time, and their levels of savings and borrowings would grow over time, • Durable and sustainable, and they would keep good records, • The SHGs would be easy for the banks to deal with, and would also be ‘member-friendly’
- 5. Contd. • SHPI Suitability •SHGs with banks are appreciated as profitable business but main aim is to provide formal financial services to poor • Required to look which type of SHPI will be most suitable to address poorest people • NGOs are not always concentrated in the places where the poorest people live • NGOs can be substituted by which type of SHPI
- 6. Contd. • The NABARDSHPI Assistance Programmes • The study is not only to compare different types of SHPI, but also to see in which way NABARD promote more and better SHGs • The maximum payments per SHG linked which NABARD can make to the SHPIs are as follows: NGOs up to Rs 2000 RRBs up to Rs 1000 VVVs up to Rs 700 Individual ‘Volunteers’ up to Rs 700, plus Rs 400 for the bank
- 7. No. of SHGlinked by Different agencies as on 31st march 2002 SHPI NGO Bank VVVs Govt . Agencies Self-employed No individuals SHPI Number of SHGs promoted 136000 80000 2000 242000 N/A N/A Percentage 30% 17% 1% 52% N/A N/A
- 8. Findings from SHPIInterviews Activities 5 NGOs Who keeps SHGs records after SHG linkage? 6 Banks 5 VVVs 3 Govt. agencies 1 Individual 3/5, the SHG 6/6, the itself or its SHG or its employee. 2/5, the employee NGO 3/5, the SHG 2/5, the VVV 2/3 the SHG 1/3, the govt. worker The individual Volunteer How long to prepare an SHG for linkage? 6 to 18 Months 6 to 12 months 6 to 12 months 6 to 18 months 6 to 18 months After linkage, how long do you support the SHGs 6 to 36 months 12 months to fore ever 8 to 48 months 6 to 24 months 60 months How many staff-day equivalents to prepare an SHG for linkage? 4 to 40 days 2 to 14 days 2 to 24 days 5 to 35 days 22 day What is the cost of the process, including the staff time ? Rs 1200 to 20400 Rs 1200 to 8750 Rs 400 to 4200 Rs 200 to 7000 Rs 3300 What stops you from promoting more SHGs Staff time, NABARD delays, SGSY and political „hijacking The expense, and shortage of management time NABARD limits and delays, the cost and shortage of time Defaults in existing groups, staff time, people are not interested Bankers are reluctant to lend, particularly but not only if the members are related to defaulters
- 9. BANKS • The sixteenbranches included nine RRB branches, two commercial bank branches, three district central cooperative bank branches and two of their related primary agricultural credit societies (PACS) • They had financed between 22 and 230 SHGs each, and in every case their on-time recovery experience with SHG loans was better than their average recoveries • The deposits from SHGs amounted to between 0.19% and 7.6% of their total deposits and between 0.26% and 17.3% of their total advances • In every case except one PACS and one RRB branch, their SHG loan portfolio exceeded their SHG savings balances by a wide margin
- 10. Bankers’ Opinions aboutSHIPs Advantages Disadvantages NGOs No cost to bank, committed to the poor, good Motivated only by NABARD incentives, do not follow community contact up SHGs after linkage Banks themselves No ‘middlemen’, direct contact with clients, fast Costly in staff time, and expenses such as decisions possible without reference to others, no transport, particularly heavy burden on branch political or other interests except business, no managers. withdrawal problem VVVs No cost to bank, have good community and bank Untrained, dependent on voluntary effort, may contacts, can mobilise community pressure for contacts, can mobilise community pressure for recovery recovery Government agencies Already have a presence in villages, know and are Politicised and grant or subsidy oriented. known to the community and to the panchayat officials Individual `volunteers’ Un received bank loans. biased, easy to contact, Hard to identify and train, not clear who will pay, committed bank is dependent on one person, may have hidden interests.
- 11. NABARD‟s Management &Monitoring Strategy • Delegation Of Management Of SHG Promotion: • The NABARD introduce an apex body in a district called DDMs to promote SHGs with Banks and other SHIPs • Business for banks, given “capitation fee” for each SHG link • Monitoring: • The SHG need to monitored to avoid „client drift‟ • An Objective system need to be designed in order to appraise SHGs which can routinely, rapidly, economically, and consistently used to measure financial and social health of SHGs
- 12.
Editor's Notes
- #8 It is also important to note that only 16,300 or under 12%, of the linked SHGs promoted by NGOs have been promoted with financial assistance from NABARD. Such assistance has only been available on a regular basis since early 1999, and many NGOs were and still are promoting SHGs without such assistance. They are funded by foreign or domestic donors, or SHG promotion is ‘bundled’ with a range of different social and community development programmes. Similarly, some banks, including Regional Rural Banks (RRBs) have been themselves promoting SHGs for many years. NABARD conducted an experiment with 16 RRBs to assist this process, between 1994 and 1998, but regular financial assistance to RRBs for this purposes has only been provided since 1999. By 31.3.2002 only 52 RRBs, or about one quarter of the total number, had been assisted in this way.
- #10 Bankers are also the customers of the SHPI, in a different sense. If a SHPI is unable to ‘sell’ its groups to banks, for whatever reason, then the system will break down. Bankers’ opinions about the merits of different SHPIs are therefore vital, and we attempted to identify bank branches which had lent to SHGs which had been promoted by more than one type of SHPI. Thirteen of the sixteen bank branch managers whom we met had financed SHGs promoted by two, three or even four different types of SHG.
- #11 The main conclusion which emerges from the bankers’ views is that they would very much prefer to do business with SHGs which they themselves had promoted, so long as the two problems of staff costs and branch managers’ time could be overcome.